* Euro edges higher, cautious over Ukraine peace talks
* Focus back on the ECB after strong inflation data
* Norwegian crown falls tracking moves in oil prices
* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E
March 31 (Reuters) - The euro edged higher on Thursday extending a run of gains on hopes for progress in Ukraine peace talks, while investors’ focused on the European Central Bank’s potential monetary tightening after strong inflation data.
Analysts remain cautious about further euro gains as Russian forces prepared for new attacks in the east of Ukraine, while no quick resolution is expected from peace talks that will resume on Friday.
The euro rose 0.05% to $1.1160 after hitting its highest since March 1 at $1.1184.
“Until the risk of an energy crisis and considerable economic effects resulting from the Ukraine war have not been banished, the ECB is likely to hesitate to make a clear commitment,” Antje Praefcke, forex analyst at Commerzbank, said in a note to clients.
“And as a result, it will also be a while before the euro can appreciate on a sustainable basis,” she added.
Money markets are currently pricing in an around 90% chance of 20 basis points (bps) of ECB rate hikes by July 2022 and 65 bps by year-end.
European Central Bank President Christine Lagarde said on Wednesday inflation should stop rising after data in Spain and Germany showed a higher-than-expected rise in consumer prices.
The dollar index, which measures the U.S. currency against six peers, dipped 0.04% to 97.795.
The Norwegian crown fell around 0.7% against the euro and the dollar respectively to 9.6162 and 8.6176 after oil prices plunged as the United States considered releasing up to 180 million barrels from its strategic petroleum reserve.
The Norwegian currency remains within striking distance of reaching its highest since October 2018 against the euro at 9.4424 and its highest since November 2021 versus the dollar at 8.5675, which it hit last week on the back of a rally in Brent crude oil futures.
Other commodity currencies, such as the Australian and New Zealand dollar, dropped by around 0.4%.
The Swedish crown was slightly lower against the euro, just off its highest since January of 10.3059 that it hit on Wednesday as the central bank said it would have to tighten monetary policy this year.
Bitcoin was down 0.3% at $47,149, while Ether , the world's second-largest cryptocurrency, was up 0.4% at $3,400. (Reporting by Stefano Rebaudo; Editing by Jane Merriman)
